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Social and financial incentives for overcoming a collective action problem

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  • Bakhtiar, M. Mehrab
  • Guiteras, Raymond P.
  • Levinsohn, James
  • Mobarak, Ahmed Mushfiq

Abstract

Addressing public health externalities often requires community-level collective action. Due to social norms, each person’s sanitation investment decisions may depend on the decisions of neighbors. We report on a cluster randomized controlled trial conducted with 19,000 households in rural Bangladesh where we grouped neighboring households and introduced (either financial or social recognition) rewards with a joint liability component for the group, or asked each group member to make a private or public pledge to maintain a hygienic latrine. The group financial reward has the strongest impact in the short term (3 months), inducing a 7.5–12.5 percentage point increase in hygienic latrine ownership, but this effect dissipates in the medium term (15 months). In contrast, the public commitment induced a 4.2–6.3 percentage point increase in hygienic latrine ownership in the short term, but this effect persists in the medium term. Non-financial social recognition or a private pledge has no detectable effect on sanitation investments.

Suggested Citation

  • Bakhtiar, M. Mehrab & Guiteras, Raymond P. & Levinsohn, James & Mobarak, Ahmed Mushfiq, 2023. "Social and financial incentives for overcoming a collective action problem," Journal of Development Economics, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:deveco:v:162:y:2023:i:c:s0304387823000275
    DOI: 10.1016/j.jdeveco.2023.103072
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    More about this item

    Keywords

    Development; Environment; Sanitation; Collective action problems;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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